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01/06/2017

Recovery of Damages in Tort and Exemplary/Punitive Damages  General Principles

by:PARIANA DEMETRIOU

A Tort is a civil wrong that causes someone to suffer loss or harm. The person that suffers loss or harm, as a result of the wrongful act, is entitled to some form of remedy. Usually, this remedy is in the form of damages; compensatory damages and punitive damages.

The underlying principle for recovery of damages in Tort is that found in the English case law as expressed by Lord Blackburn in Livingstone v. Rawyards Coal Co. [1880] 5 App. Cas., 25 at p. 29, that “damage should be the amount of money that should put the plaintiff in the position he would be if he did not suffer the wrong”.

The Supreme Court of Cyprus in the landmark case of Berengaria P. Papakokkinou v. Princess Zena De Tyras Kanther (1982) 1 CLR 65 agreed with this principle. Pikis J, in delivering the judgment, stated that they were “in full agreement that restoration ab integrum [restoration to the original condition] is the object of compensatory damage in tort.” He continued saying that “so long as the award is designed to restore the injured party to the position he would enjoy but for the civil wrong, it will be upheld provided the outcome is also one reckoned as fair between the parties…”

When deciding the amount of the award of compensatory damages, the Courts take into consideration previous court judgments. These judgments are not binding upon the Courts, but are merely used for guidance (G&L Calibers Ltd v. Lemesianou (2003) 1 JSC 948). Nevertheless, case law is important so there can be consistency and certainty (Spyros Melis and Eleni Ltd et.al v. Marinos Savva Politi (2003) 1 JSC 590). Furthermore, the award must reflect the value money at a given time, so as to reasonably approach, at least monetarily, the reinstatement of the victim (Lankuttis v. Nikola (2002) 1 JSC 1128). Case law reveals an increase in the amount of damages awarded, but it was stated that damages must not exceed what is socially acceptable (Mavropetri v. Louka (1995) 1 JSC 66).

In addition to compensatory damages, the Court may award punitive or exemplary damages in cases where it finds it appropriate. The House of Lords in the case of Rookes v. Barnard (1964) 1 All E.R. 367 held that the award of exemplary damages should be confined to three categories of cases:

Civil wrongs resulting from the use of oppressive and unconstitutional conduct by servants of the Crown.

Civil wrongs committed in gross disregard to the rights of the injured party, perpetrated in circumstances calculated to yield profit to the perpetrator, and

Where the statute expressly permits award of exemplary damages.

The Courts in Cyprus, when faced with the question of whether or not to award punitive damages, had referred to the principles set by the English case law. Pikis J in his judgment in the case of Papakokkinou above stated that “at common law, exemplary damages may be awarded. The determination of the policy of the courts of each jurisdiction on the subject of exemplary damages, is apt to vary, depending on social ethics and the need arising to proclaim the efficacy of the law outside the bounds of the criminal law. In Cyprus, there is no authoritative pronouncement of the applicability of the principles upheld in Rookes. However, dicta in Savvas Paraskevas v. Despina Mouzoura (1973) 1 C.L.R. 78, suggest that exemplary damages need not of necessity be confined within the limits earmarked in Rookes.” The judgment continues stating a principle found in Rookes, namely that conduct accompanied by an element of arrogance, insolence or malice, may justify an award of exemplary damages, particularly if it tends to humiliate the victim.

The Courts in Cyprus continued exploring the matter of punitive damages and have followed the guidelines set by the above landmark case of Papakokkinou as to when this type of damages may be awarded. It has been said by the Supreme Court in the case of Attorney General v. Palma et.al., Civil Appeal no. 44/2013, 19/11/2015 that exemplary or punitive damages aim to punish the defendant and prevent him from similar behaviors, and shall be awarded when the plaintiffs’ feelings have been harmed due to elements of extreme arrogance or oppressive conduct by the defendant for which he must be punished as an indication of the revulsion of such conduct by the law. Also, in the case of Xenofontos v. Rajab, Civil Appeal no. 169/2010, 26/11/2014 the Supreme Court had said that the seriousness of the defendant’s conduct as well as his financial situation are decisive factors when determining the amount of the award of punitive damages.

Lastly, in the case of Loucas Constantinou or Loucas K. Mita v. G&K Sofokleous Ltd (2003) 1 JSC 1952 the Supreme Court had followed, and thus accepted, the guidelines found in the English case of Cassell & Co. v. Broome [1972] Α.C. 1027. It quoted in its judgment a passage from the decision of Lord Reid, who explained how Courts must approach and decide for an award of punitive damages. He had stated that “The difference between compensatory and punitive damages is that in assessing the former the jury or other tribunal must consider how much the plaintiff ought to receive, whereas in assessing the latter they must consider how much the defendant ought to pay. It can only cause confusion if they consider both questions at the same time. The only practical way to proceed is first to look at the case from the point of view of compensating the plaintiff. He must not only be compensated for proved actual loss but also for any injury to his feelings and for having had to suffer insults, indignities and the like. And where the defendant has behaved outrageously very full compensation may be proper for that. So the tribunal will fix in their minds what sum would be proper as compensatory damages. Then if it has been determined that the case is a proper one for punitive damages the tribunal must turn its attention to the defendant and ask itself whether the sum which it has already fixed as compensatory damages is or is not adequate to serve the second purpose of punishment or deterrence. If they think that that sum is adequate for the second purpose as well as for the first they must not add anything to it. It is sufficient both as compensatory and as punitive damages. But if they think that sum is insufficient as a punishment then they must add to it enough to bring it up to a sum sufficient as punishment. The one thing which they must not do is to fix sums as compensatory and as punitive damages and add them together. They must realise that the compensatory damages are always part of the total punishment.”

As we can draw conclusion from the above, each case will be examined on its own facts and merits. The Courts will determine whether a particular case allows for an award of damages. If so the Court will award compensatory damages and then, if it thinks fit, will proceed to examine whether exemplary or punitive damages should be awarded.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought on your specific circumstances. For further information, please contact Pariana Demetriou at pariana@kyprianou.com.cy